CHASE
THE CHASE MANHATTAN BANK
SECURITY AGREEMENT
(General Purpose)
This Agreement, made this 12th day of July 2000, between THE CHASE
MANHATTAN BANK (herein called the "Bank") and HAUPPAUGE COMPUTER WORKS, LTD.
(herein called the "Borrower"), (the "Agreement").
1. DEFINITIONS OF TERMS USED HEREIN. (a) "Borrower" includes all
individuals executing this agreement as parties hereto and all members of a
partnership when the Borrower is a partnership, each of whom shall be jointly
and severally liable individually and as partners hereunder. (b) "Liability" or
"Liabilities" includes all liabilities (primary, secondary, direct, contingent,
sole, joint or several) due or to become due, or that may be hereafter
contracted or acquired, of the Borrower (including the Borrower and any other
person) to the Bank, including without limitation all liabilities arising under
or from any note, loan or credit agreement, letter of credit, guaranty, draft,
acceptance, interest rate or foreign exchange agreement or any other instrument
or agreement of (or the responsibility of) the Borrower or any loan, advance or
other extension of credit or financial accommodation to the Borrower by the
Bank. (c) "Proceeds" means whatever is received when Collateral is sold,
exchanged, leased, collected or otherwise disposed of and includes the account
arising when the right to payment is earned under a contract. (d) "Security
Interest" means a lien or other interest in Collateral which secures payment of
a liability or performance of an obligation. (e) "Collateral" means the property
described in Section 2 hereof and the following described property of the
Borrower:
SEE SCHEDULE 1 ATTACHED HERETO AND MADE A PART HEREOF
All terms used herein which are also defined in the New York or any other
applicable Uniform Commercial Code shall also have at least the meanings herein
as therein defined.
2. SECURITY INTEREST. As security for the payment of all loans and other
extensions of credit or other financial accommodations now or in the future made
by the Bank to the Borrower and all other liabilities of the Borrower to the
Bank, the Borrower hereby grants to the Bank a Security Interest in the
above-described Collateral and all and any Proceeds arising therefrom and all
and any products of the Collateral.
The Borrower represents and warrants that it is the sole lawful owner of
the Collateral, free and clear of any liens and encumbrances, and has the right
and power to pledge, sell, assign and transfer absolute title thereto to the
Bank and that no financing statement covering the Collateral, other than the
Bank's, is on file in any public office.
To further secure the Liabilities, the Borrower hereby grants, pledges and
assigns to the Bank a continuing lien, Security Interest and right of set-off in
and to all money, securities and all other property of the Borrower, and the
Proceeds thereof, now or hereafter actually or constructively held or received
by or for the Bank, Chase Securities Inc. or any other affiliate of the Bank for
any purpose, including safekeeping, custody, pledge, transmission and
collection, and in and to all of the Borrower's deposits (general and special)
and credits with the Bank, Chase Securities Inc. or any other affiliate of the
Bank. The Borrower authorizes the Bank to deliver to others a copy of this
Agreement as written notification of the Borrower's transfer of a Security
Interest in the foregoing property. The Bank is hereby authorized at any time
and from time to time, without notice, to apply all or part of such money,
securities, property, proceeds, deposits or credits to any of the Liabilities in
such amounts as the Bank may elect in its sole and absolute discretion, although
the Liabilities may then be contingent or unmatured and whether or not the
Collateral security may be deemed adequate.
3. USE OF COLLATERAL. Until default, the Borrower may sell or use the
Collateral in any lawful manner, including without limitation the sale of
inventory and other assets of the Borrower in the ordinary course of business.
If the Collateral is or is about to become affixed to realty, the Borrower will,
at the Bank's request, furnish the Bank a writing executed by the mortgagee of
the realty whereby the mortgagee subordinates its rights and priorities to the
Bank's Security Interest in the Collateral. If the Collateral is or may become
subject to a landlord's lien, the Borrower will at the Bank request, furnish the
Bank with a landlord's waiver satisfactory in form to the Bank. The Borrower
shall not transfer any Collateral to any other location if such transfer shall
result in such Collateral being located outside of any jurisdiction of the
United States.
4. INSURANCE. The Borrower will have and maintain insurance on the
Collateral until this Agreement is terminated against all expected risks to
which it is exposed, including fire, theft and collision, and those which the
Bank may designate, such insurance to be payable to the Bank and the Borrower as
their interest may appear; all policies shall provide for thirty (30) days'
written minimum cancellation notice to the Bank. The Bank may act as attorney
for the Borrower in obtaining, adjusting, settling and canceling such insurance.
5. DEFAULT. Default shall exist hereunder: (1) if the Borrower shall fail
to pay any amount of the Liabilities when due or if the Borrower shall fail to
keep, observe or perform any provision of this Agreement or of any note, or
other instrument or agreement between the Borrower and the Bank relating to any
Liabilities or if any default or Event of Default specified or defined in any
such note, instrument or agreement shall occur; or (2) if the Borrower shall or
shall attempt to: (a) remove or allow removal of the Collateral from the county
where the Borrower now resides, except in the ordinary course of business, or
change the location of its chief executive office or principal place of
business; (b) sell, encumber or otherwise dispose of the Collateral or any
interest therein or permit any lien or Security Interest (other than the Bank's)
to exist thereon or therein, except in the ordinary course of business, (c)
conceal, hire out or let the Collateral, except in the ordinary course of
business, (d) misuse or abuse the Collateral, or (e) use or allow the use of the
Collateral in connection with any undertaking prohibited by law; or (3) if
bankruptcy or insolvency proceedings shall be instituted by the Borrower; or (4)
if bankruptcy or insolvency proceedings shall be instituted against the Borrower
and such proceedings remain undismissed, undischarged or unbonded for a period
of 60 days; or (5)if the Collateral shall be attached, levied upon, seized in
any legal proceedings, or held by virtue of any lien or distress; or (6) if the
Borrower shall make any assignment for the benefit of creditors; or (7) if the
Borrower shall fail to pay promptly all taxes and assessments upon the
Collateral or the use thereof, unless disputed in good faith by appropriate
proceedings and provided that adequate reserves with respect thereto are
maintained on the books of the Borrower in conformity with generally accepted
accounting principals; or (8) if the Borrower shall die; or (9) if the Bank with
reasonable cause determines that its interest in the Collateral is in jeopardy;
or (10) if the Borrower should fail to keep the Collateral suitably insured. In
the Event of Default or the breach of any undertaking of or conditions to be
performed by the Borrower: (1) all Liabilities shall become immediately due and
payable; and (2) the Borrower agrees upon demand to deliver the Collateral to
the Bank, or the Bank may, with or without legal process, and with or without
previous notice or demand for performance, enter any premises wherein the
Collateral may be, and take possession of the same, together with anything
therein, and the Bank may make disposition of the Collateral subject to any and
all applicable provisions of the law. If the Collateral is sold at public sale,
the Bank may purchase the Collateral at such sale. The Bank, provided it has
sent the statutory notice of default, may retain from the proceeds of such sale
all reasonable costs incurred in the said taking and sale and also, all sums
then owing by the Borrower, and any surplus of any such sale shall be paid to
the Borrower.
6. GENERAL AGREEMENTS. (a) The Borrower agrees to pay the costs of filing
financing statements and of conducting searches in connection with this
Agreement. (b) The Borrower agrees to allow the Bank through any of its officers
or agents, at all reasonable times, to examine or inspect any of the Collateral
and to examine, inspect and make extracts from the Borrower's books and records
relating to the Collateral. (c) The Borrower will promptly pay when due all
taxes and assessments upon the Collateral or for its use of operation or upon
the proceeds thereof or upon this Agreement or upon any note or other instrument
or agreement evidencing any of the Liabilities. (d) At its option, the Bank may
discharge taxes, liens or Security Interests or other encumbrances at any time
levied or placed on the Collateral, and may pay for the maintenance and
preservation of the Collateral, and the Borrower agrees to reimburse the Bank on
demand for any reasonable payment made or any expense incurred by the Bank
pursuant to the foregoing authorization, including outside or in-house counsel
fees and disbursements incurred or expended by the Bank in connection with this
Agreement. (e) The Borrower hereby authorizes the Bank to file financing
statements and any amendments thereto without the signature of the Borrower.
Such authorization is limited to the Security Interest granted by this
Agreement. (f) The Borrower agrees that the Bank has the right to notify (on
invoices or otherwise) account debtors and other obligors or payors on any
Collateral of its assignment to the Bank, and that all payments thereon should
be made directly to the Bank, and that the Bank has full power and authority to
collect, compromise, endorse, sell or otherwise deal with the Collateral on its
own name or that of the Borrower at any time, following the occurrence of an
Event of Default. (g) The Borrower agrees to pay or reimburse the Bank on demand
for all reasonable costs and expenses incurred by it in connection with the
administration and enforcement of this Agreement and the administration,
preservation, protection, collection or realization of any Collateral (including
outside or in-house attorneys' fees and expenses). (h) The Bank shall not be
deemed to have waived any of its rights hereunder, or under any other agreement,
instrument or paper signed by the Borrower unless such waiver is in writing and
signed by the Bank. No delay or omission on the part of the Bank in exercising
any right shall operate as a waiver thereof or of any other right. A waiver upon
any one occasion shall not be construed as a bar or a waiver of any right or
remedy on any future occasion. All of the rights and remedies of the Bank,
whether evidenced hereby or by any other Agreement, instrument or paper, shall
be cumulative and may be exercised singly or concurrently. (i) This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York. (j) This Agreement, and the Security Interests, obligations, rights
and remedies created hereby, shall inure to the benefit of the Bank and its
successors and assigns and be binding upon the Borrower and its heirs,
executors, administrators, legal representatives, successors and assigns.
7. EXECUTION BY THE BANK. This Agreement shall take effect immediately upon
execution by the Borrower, and the execution hereof by the Bank shall not be
required as a condition to the effectiveness of this Agreement. The provision
for execution of this Agreement by the Bank is only for purposes of filing this
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Agreement as a security agreement under the Uniform Commercial Code, if
execution hereof by the Bank is required for purposes of such filing.
HAUPPAUGE COMPUTER WORKS, LTD.
(Borrower)
By /s/ Xxxxxxx X. Xxxxxxxx, as President
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By /s/ Xxxxxxx Xxxxxxx, as Chairman and CEO
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00 Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Places of business in counties other than above:
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THE CHASE MANHATTAN BANK
By: /s/ Xxxxxxxxxxx Xxxxxxx, VP
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(Name and Title)
Address: 000 X. Xxxxxxx Xxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
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